Target Healthcare REIT acquisition of two development sites

Target Healthcare, a UK listed specialist investor in modern, purpose-built care homes, has announced that it has completed the acquisition of two well-advanced developments in Cumnor Hill, Oxford and Badgers Mount, near Sevenoaks in Kent. The total value of the transaction is £37 million (including transaction costs and future development works), meaning that the Group’s remaining uncommitted capital is fully deployed.
The remainder of the development works will be funded under capped development contracts to create two high-quality residential care homes with a combined total of 130 beds. The properties will be completed to a high standard, with the inclusion of full en-suite wetroom facilities, large communal areas, extensive on-site facilities and offering a premium fit-out. The investment is underpinned by the strong wealth characteristics and positive underlying demographics of the local areas.
Both developments are due to complete by mid-2019 and the completed homes will be let on a full repairing and insuring basis to Hamberley Group (Hamberley), a developer and operator of luxury care homes, which is backed by Patron Capital, the pan-European institutional investor focused on property backed investments. The founders and principals of Hamberley have a strong track record in the UK healthcare sector having previously established Gracewell Healthcare and The Badby Group. Hamberley will represent the Group’s twenty-second tenant, providing further tenant diversification.
The 35-year occupational leases include annual, upwards-only RPI-linked increases, subject to a cap and collar. The yield is representative of assets of a similar standard and location within the Group’s portfolio and rental payments will commence on occupation by Hamberley of the completed buildings.
The transaction sees the Group commit to a significant amount of the £79 million of near-term investment pipeline identified in its announcement on 24th October 2018 as well as allowing it to fully deploy its remaining uncommitted capital. The Group has further near-term potential acquisitions currently in due diligence totalling approximately £42 million. In addition to this, there is a significant medium-term pipeline of potential opportunities totalling over £70 million across eight different assets that the Group is looking to progress to agreed heads of terms.
John Flannelly, Head of Investment at Target Fund Managers, commented on the acquisition:
“We are delighted to announce the completion of this transaction which enables us not only to add two premium, purpose-built properties to the portfolio, but also welcome a highly-regarded operator into our tenant group.”